The ECB loan is being syndicated by ABN Amro Bank and State Bank of India. General syndication has been launched by the co-ordinating arrangers on November 1, 1998, and the target date of closure is November 16, 1998.

The ECB loan carries a fixed rate of interest between 3 per cent and 3.5 per cent per annum and is for a tenor of 9 years and 8 months.

While talking to The Financial Express, IRFC managing director P Rajagopalan said, "So far the response is good. S&P's downgrading has not affected the sentiment in the international market and we are hopeful of mopping up the target amount."

The loan is being availed to refinance a loan worth11.7 billion yen availed between 1988 and 1995 by the corporation from the Export-Import Bank of Japan and disbursed to the Indian Railways over an eight-year period for financing the rolling stock. IRFC has already repaid a part of the total loan availed from the Export-Import Bank of Japan.

According to a bank release, the refinancing is likely to result in a saving of at least 1.5 per cent per annum in interest costs, or 640 million yen, during the remaining period of the facility.

IRFC's total borrowing target for the current fiscal is Rs 2,665 crore out against which it has already raised Rs 2,163 crore through long-term bilateral loans from banks maturing in 2013. Of the total amount, the company raised Rs 255 crore from the market through a 10-year paper at the rate of 10.5 per cent in August-September, 1998. IRFC will raise the balance Rs 502 crore either through the private placement route or a public issue.

This is the third time the company has tapped the offshore debt market. The companyraised $70 million in March, 1996, at 115 basis points above Libor and $150 million in 1997 at 75 basis points above Libor.